New White Paper From Forward Management Highlights an Unfolding $40 Trillion Global Infrastructure Boom

Current environment offers a "window of opportunity" for investors, the analysis concludes

Sep 27, 2011, 11:48 ET from Forward Management, LLC

SAN FRANCISCO, Sept. 27, 2011 /PRNewswire/ -- A massive surge of global infrastructure demand and spending over the next two decades, coupled with increasing privatization of the sector, may mean burgeoning opportunities for private companies and investors alike, concludes a new white paper released today by Forward Management.

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Titled "Investing in the Global Infrastructure Boom," Forward's analysis notes that infrastructure stocks, as measured by the S&P Global Infrastructure Index, are still trading at discounts to long-term averages, pointing to a possible near-term window of opportunity for investors.    

The paper details portfolio benefits offered by the infrastructure asset class at a time when investors are seeking new ways to temper high-levels of global market volatility and enhance returns.  Some historical benefits include: stable cash flow and consistently attractive yields through economic cycles, some inflation- and currency-hedging ability, low correlations with other real assets, and an attractive historical risk/reward profile. During the past decade, the S&P Global Infrastructure Index has produced higher returns than U.S. or global stock indexes with similar volatility(1).  

Global spending on water, power, transportation and telecommunications systems is expected to  total $40 trillion to $50 trillion USD between 2010 and 2030, according to projections cited in the paper.  Forward's analysis discusses four major trends that are converging to create what they believe is "a perfect storm" of infrastructure demand and investment opportunity:

  • The rapid urbanization and rising affluence of emerging markets, which must fulfill pent-up infrastructure demand and rapidly accelerating new demand in order to grow.

  • Aging infrastructure in developed nations, which over the last 30 or 40 years have lagged in system maintenance while under-investing in new capacity.    

  • Environmental and climate change initiatives, as nations develop more advanced infrastructure systems in the effort to provide cleaner energy, reduce the transportation impacts of population growth, and maximize scarce water resources.    

  • Economic competitiveness among nations, which will need adequate infrastructure to support economic growth and attract new investment.

"Despite the large-scale spending already evident in this space, the global infrastructure boom remains underappreciated. For many investors, it may be difficult to grasp the magnitude of the global infrastructure spending surge that has already begun," said Aaron Visse, author of the study and portfolio manager of the Forward Global Infrastructure Fund.  

"Consider that the U.S. currently has nine cities with a population greater than a million.  Meanwhile, China has more than 40, and is on track to have 220 by 2025 -- and that's just China(2).  The trend is happening worldwide," he commented.

"One important advantage of infrastructure investing is that it is brand-agnostic," added Visse. "If you believe, for example, that global air traffic will keep rising, you can invest in the airport development trend without betting on which airlines will do better than others."  

Those who consider investing in infrastructure should assess regulatory and credit risks associated with the sector in addition to the usual risks of global investing, the report states.  It suggests that investors may mitigate risks by focusing on vehicles that invest broadly in infrastructure trends and are managed by sector specialists able to analyze the varying risk levels of specific infrastructure development projects and operations.  

The Forward Global Infrastructure Fund (FGLRX) is an actively-managed mutual fund that invests broadly in global infrastructure trends, seeking total return through capital appreciation and income.  The Fund takes an unusually expansive view of infrastructure-related opportunities, defining the sector to include a diverse array of related supply and service providers as well as companies that develop or operate infrastructure assets.  It is available in investor and institutional share classes.

"Until recently, the opportunities in infrastructure trends were available mainly to institutions that could invest directly in major development projects or in private-equity vehicles," said Alan Reid, chief executive officer of Forward Management. "The good news is that more liquid, infrastructure-focused investment choices are now available to all investors who want to diversify their portfolios in line with the shifting global economy."

About Forward Management, LLC
Forward Management, LLC, is a privately-held asset management firm that uses a forward-thinking, problem-solving approach to help investors and advisors navigate a shifting, uncertain investment climate. Based in San Francisco, the firm is the investment advisor to the Forward Funds. It gives investors and their advisors access to a broad spectrum of investment and asset allocation solutions, including an evolving set of alternatives to traditional, long-only investing. As of June 30, 2011, Forward Management had a total of $5.7 billion in assets under management in a product set including mutual funds, separate account strategies, and limited partnerships. More information can be found at www.forwardmgmt.com.

The S&P Global Infrastructure Index provides liquid and tradable exposure to 75 companies from around the world that represent the listed infrastructure universe. To create diversified exposure across the global listed infrastructure market, the index has balanced weights across three distinct infrastructure clusters: Utilities, Transportation, and Energy.

Credit risk is the risk of loss of principal or loss of a financial stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt.

Liquid measures the extent to which an asset can be converted to cash quickly and without any price discount.

Past performance does not guarantee future results.

One cannot invest directly in an index.

There are risks involved with investing, including loss of principal. Past performance does not guarantee future results, share prices will fluctuate, and you may have a gain or loss when you redeem shares.

Alternative strategies typically are subject to increased risk and loss of principal. Consequently, investments such as mutual funds which focus on alternative strategies are not suitable for all investors.

A fund that concentrates in a particular industry will involve a greater degree of risk than a fund with a more diversified portfolio.

Foreign securities, especially emerging or frontier markets, will involve additional risks including exchange rate fluctuations, social and political instability, less liquidity, greater volatility, and less regulation.

A "non-diversified" fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a "diversified" fund. The net asset value per share of a non-diversified fund can be expected to fluctuate more than that of a comparable diversified fund.

You should consider the investment objectives, risks, charges and expenses of the Forward Funds carefully before investing. A prospectus with this and other information may be obtained by calling (800) 999-6809 or by downloading one from www.forwardfunds.com. It should be read carefully before investing.

Forward Funds are distributed by ALPS Distributors, Inc. Separately Managed Accounts and related investment advisory services are provided by Forward Management, a federally regulated Investment Advisor.

Alan Reid is a registered representative of ALPS Distributors, Inc.

(1) Source: Morningstar, as of June 30, 2011

(2) Source: National Bureau of Statistics of China; Business Week, China Prepares for Urban Revolution, November 13, 2008.

Contact: Justin Lavelle
Kanter & Company
(703) 534-2150

SOURCE Forward Management, LLC



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